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Answer: 41,195
## Explanation To solve this problem, we need to: 1. **Calculate the peer group median EBIT margin** 2. **Calculate what GutWare's EBIT would be at that median margin** 3. **Calculate the resulting operating costs** ### Step 1: Find the median EBIT margin Peer EBIT margins: 23%, 17%, 27%, 19%, 25% Sorted: 17%, 19%, 23%, 25%, 27% **Median EBIT margin = 23%** (middle value) ### Step 2: Calculate GutWare's EBIT at 23% margin GutWare's Revenue = 53,500 million GBP EBIT at 23% margin = 53,500 × 23% = 12,305 million GBP ### Step 3: Calculate operating costs Operating Costs = Revenue - EBIT Operating Costs = 53,500 - 12,305 = 41,195 million GBP Therefore, the correct answer is **B. 41,195**.
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| Revenues (GBP Millions) | EBIT (GBP Millions) | EBIT Margin (%) |
|---|---|---|
| GutWare | 53,500 | 5,885 |
| Peer 1 | 54,100 | 12,443 |
| Peer 2 | 72,200 | 12,274 |
| Peer 3 | 62,300 | 16,821 |
| Peer 4 | 75,900 | 14,421 |
| Peer 5 | 34,200 | 8,550 |
If GutWare's EBIT margin were equal to that of the peer group median, its operating costs (in GBP millions) would total:
A
41,057
B
41,195
C
41,623